Prison for duo behind $100M stock fraud

Scheme stole from wealthy to fund lavish lifestyles

San Diego  A $100 million stock fraud scheme targeted the rich around the world, funding a life of luxury for the three men behind it.

But the gated mansions, yacht, private plane, Bentley, jewelry and country club memberships have been replaced with court ordered restitution and prison time.

On Monday, Jeffrey Spanier, 49, former owner of Amerifund Capital Finance, was the last to be sentenced in the scheme. A San Diego federal judge ordered him to serve 10 years in prison, pay nearly $20.7 million in restitution and forfeit millions of dollars in assets, including cash, securities and his palatial Florida home.

His business partner, Douglas McClain Jr., was sentenced to 15 years and ordered to pay more than $80 million in restitution. The third co-defendant, James Miceli, committed suicide before his trial.

The scheme preyed on wealthy stockholders from the U.S., Canada, Mexico, Panama, China, England and Belgium.

McClain and Miceli, owners of Poway-based Argyll Equities, partnered with Spanier’s firm to offer loans to corporate executives. The executives put up millions of dollars of stock in publicly-traded companies as collateral, and were promised that nothing would happen to the stock as long as there were no defaults on the loan, court records show.

But the enterprise was nothing more than a Ponzi-like scheme, the U.S. Attorney’s Office said.

Rather than hang onto the stock, the men sold it immediately, using the cash to fund the loans. The unsuspecting borrowers also paid monthly interest payments on their loans.

When the loan had been paid off, Spanier and McClain made up excuses why the executive’s stock couldn’t be returned. They would blame it on a “misunderstanding”. When the executives took the matter to court, the victims would often agree to a judgment against the shell corporation as long as the conduct wasn’t made public.

But, prosecutors said, the shell corporations never paid the judgments.

Authorities said the sale of the stock affected the market as well, causing some stock prices to plummet.

For nine years, the scheme funded a lavish lifestyle for the men, prosecutors said. Spanier lived in a country club community in Delray Beach, Fla., and drove a Bentley. McClain lived in a gated mansion in Savannah, Ga. Miceli had a mansion, a yacht, a Ferrari and a Cessna Citation.

At one point, in an effort to legitimize themselves, McClain and Miceli launched a shell biotech company, Immunosyn Corporation, that was purportedly developing goat blood into a new wonder drug to cure multiple sclerosis and other terminal illnesses. The men raised more than $20 million from investors between 2006 and 2010, prosecutors said.

But the lies took a toll, court records show. In an email Spanier sent to McClain in 2007, he wrote:

“By Go_d, (sic) if you only knew what it takes to sell a story. … I just tired of acting like a fast talking salesman with minimal answers to questions and statements being made to myself, my employees and my network.”

The three men were indicted in 2012.

In Spanier's trial, his lawyer argued Spanier didn’t know about the fraud, just helped broker the transactions from Florida. When the FBI uncovered the scheme, Spanier was unconcerned, his lawyer wrote in court documents, because “he was convinced that he had done nothing wrong.”

McClain is appealing his conviction, and Spanier has indicated he will do the same.